KfW mulls more P2P securitisations

KFW, the German state-backed bank that last year invested in Funding Circle’s £129m securitisation, is open to more deals in the peer-to-peer finance sector in 2017.

The development bank bought £44m of the most senior tranche of business loans, which were owned by US asset manager KLS and originated through Funding Circle’s platform.

Last month, KfW said it plans to commit €1.3bn (£1.1bn) to SME securitisation deals in 2017, including up to €500m for transactions from European countries outside of Germany.

“We will remain open to possibly playing a role in a P2P transaction like our investment in the Funding Circle asset-backed securities (ABS) transaction in 2016,” a KfW spokesperson told Peer-to-Peer Finance News via email.

“However, like in all our activities, a variety of prerequisites need to be fulfilled in order to taking a positive internal decision for an investment.”

Securitisation is the process of packaging up loans into tranches and selling them on to institutional investors, enabling firms to leverage their debt to grow their businesses.

“The Funding Circle transaction was one out of six transactions that we invested in jointly with a partner from our ENSI network, and we are looking forward to continuing the cooperation with the European Investment Fund and European national promotional institutions in other ABS SME transactions next year,” said the KfW spokesperson.

ENSI is a government-backed initiative to stimulate SME lending by investing in, or guaranteeing, European securitisation deals.

If KfW does decide to tap into the P2P securitisation space again, it could have a number of options.

Funding Circle’s chief executive and co-founder Samir Desai has told Peer-to-Peer Finance Newsthat the platform “has plans to do more” securitisations in the near future, in order to have “as diversified funding as possible”.

And Zopa’s head of capital markets Jonathan Kramer said that the firm will “definitely” be looking to do more securitisations this year, after its £138m debut offering was oversubscribed.